March 23, 2006

Free To Play! Pay For Stuff

A really interesting GDC session I went to yesterday was the "Free To Play! Pay For Stuff" round table discussing business models for online worlds based on digital item sales hosted by Daniel James, CEO of Three Rings Design, and Matt Mihaly, CEO of Iron Realms.

Three Rings' Yohoho! Puzzle Pirates allows players to purchase Doubloons for RL money and their forthcoming game, Bang! Howdy will also use a "Free To Play, Pay For Stuff" model. The Iron Realms games allow players to buy currency which can be traded between players and used to buy digital items which become bound to characters, preventing the resale of items. Another model was described by a number of developers of digital Collectable Card Games (CCGs) which sell randomly selected digital cards of differing rarity to players. In this model the secondary market between players is important and adds value as players are prepared to pay for potentially duplicate cards when they know they can sell them on. Digital CCGs weaken the important scarcity of cards present in RL as players are able to trade with all other players and so all cards are always available, but scarcity still works to a lesser extent. Adam from Purplex City pointed out that digital item or mixed reality CCGs allow far more tracking and analysis of card trades and uses over physical card games.

While the previous models are based on selling digital items created by the developers of virtual worlds, there was some discussion about Second Life and There.com which allow the sale of user created content. A lot of concerns were expressed over the sale of copyright infringing content uploaded by players. Although There.com's model of checking and approving user created content when it is uploaded initially seems to protect against copyright infringement there was some concern that the process would make There.com more legally responsible if copyright infringing material was accidentally allowed to be submitted. There were also some concerns over Second Life's model of allowing all uploads and then removing infringing content when take down requests are received. While some people worried that Second Life could not be considered a common carrier and that the analogy to web hosting didn't hold, others were happy that Second Life could not be held responsible for copyright violations without every web hosting company being made responsible for its content.

A major attraction of digital item sales models is the ability for people to pay different amounts to based on their circumstances. Whereas flat monthly subscription fees cannot be set to levels that some players are willing to pay without becoming insurmountable barriers to other potential players, digital item sales allow every player to pay what they are willing and able to pay. Digital item sale models allow larger communities, subsidised by a minority of players and allow money rich, time poor players to play alongside the time rich players found in traditional subscription games. The criticism that digital item sales allow players to "buy the game" was countered by Matt Mihaly who argued that digital item sales allow games like golf: although players can buy better clubs, they need skill too and that subscription games allow players to "buy the game" with time anyway. The more pragmatic arguments were that if games don't allow Real Money Trade (RMT) it will happen anyway and the money will go to 3rd parties like IGE. Business models that allow digital item sales allow the developers to keep the money, for players to pay what they can and for the games to generate more revenue: some of the figures revealed were $20/user/month for Puzzle Pirates, $50/user/month for a Korean digital item sale based game and $50-60/user/month for the digital CCGs - all figures that are significantly higher than the monthly cost to play a typical subscription based game.

The question of whether digital item sales implied digital item ownership provoked some of the most interesting debate. Can digital items stored on servers run by developers ever be owned by users? Does selling digital items create a greater expectation of ownership than selling subscriptions? Do RL legal precedents set by cases of digital item theft take the decisions out of developers hands? What happens when developers want to stop running a world which contains digital items owned by its users? Although online worlds have been shut down before and players have threatened but never carried through legal action, would the situation be different if players own digital items sold to them by developers? Mike Sellars used the analogy that buying a digital item was like reserving a deck chair in a country club - you purchased the right to use the deck chair, but not the right to take the chair home. Steve Jackson argued that legislation will rule on digital item ownership and that RL already distinguishes between different types of property with different limitations: land can be owned but not moved. Without ownership are digital items are just things which we can play a trading game with, but don't want to be left holding when the music stops?

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